Tuesday, 3 September 2013

Yes, you read that right. In a move that surprised the hell out of me (and most of the Internet), software giant Microsoft has bought Finnish phone maker Nokia for a reported $7.1bn

That number is split, $5.4bn is for Nokia's handset business while the remaining $1.7bn pays for Nokia's many (and lucrative) patents.

Nokia, who were pioneers of GSM technology and formerly one of the biggest players in the mobile phone market, have suffered recently at the hands of strong competition from Samsung and Apple.

Microsoft have been making gains with it's Windows Phone operating system, recently overtaking Blackberry in the global smartphone rankings, putting them in third place behind Google and Apple. However, 3rd place is still only 3% of the market, such is the dominance of iOS and Android devices.

By buying Nokia, Microsoft appears to be making its first concerted move into phone manufacturing, something it's been unwilling to get into in the past, preferring to licence out the Windows Mobile and Windows Phone OSs to other manufacturers.

The purchase of the patents will be the biggest money spinner for MS. Nokia pioneered GSM technology and own the rights to technology such as SIM cards, mobile calls over GSM and SMS text messaging. Manufacturers have had to pay Nokia licence fees to make use of this critical functionality.

The sale should complete in early 2014 with 32000 Nokia employees moving to Microsoft, whilst most of the Nokia senior execs and Vice Presidents are expected to join the Microsoft board.

**Update**

Steve Ballmer has given a strong indication that now-former Nokia CEO Stephen Elop (a former Microsoft man) is in the running to take the reigns from Ballmer when he retires. Engaget have the details: